CubeSmart was chasing a lot of deals during the third quarter. In fact, it’s on the way to becoming this year’s most active buyer of storage facilities among the four self-storage REITs.
The company’s total acquisition volume for 2014 is on track to reach $570 million. Another $193 million worth of deals already are on the books for 2015.
As we go into November, December, January and February, our expectation is we’ll need to get a bit more aggressive in terms of opening up the discount funnel.
— CubeSmart CEO Chris Marr
“All of that investment activity has led to a busy year of capital raising as well,” said Timothy Martin, CubeSmart’s chief financial officer, told Wall Street analysts.
The company has sold shares of common stock throughout the year to raise $273.4 million. The most recent offering, which happened in October, netted the company $143 million on the sale of nearly 7.5 million shares.
A quiet fall and winter
The biggest of CubeSmart’s deals during the third quarter was the purchase of a 26-facility portfolio from Harrison Street Real Estate for $223 million. Deals for 22 of those facilities were set to close Nov. 3, with the remaining four deals expected to close by the end of March.
During the third quarter, CubeSmart closed on three facilities, in Florida and Massachusetts, for $38.9 million. After the third quarter ended Sept. 30, three facilities in Texas were purchased for $29.9 million. Another five facilities in five states are under contract to close by the end of this year for $43.4 million.
CEO Chris Marr said he expects acquisition activity to be “minimal” throughout the rest of this year.
“We may see a few more deals come through here, but for the most part … sellers get motivated in the springtime,” Marr said. “I don’t expect a big rush.”
As of Sept. 30, the company owned 390 facilities.
Development on deck
In addition to picking up existing facilities, CubeSmart has five “certificate of occupancy” deals underway — two in New York City and three in Texas.
The first of those deals is slated to close during the fourth quarter at a price of $38 million. The remaining four deals will close next year when the developers complete construction.
CubeSmart also has three facilities in New York City and one facility in Arlington, VA, under development with joint venture partners. The company is expected to invest $79.8 million in those projects, which are expected to open during the second and third quarters of 2015.
During the third quarter, CubeSmart saw its revenue go up by 17.6 percent to $97 million compared with the same time last year. Same-store revenue grew 7.7 percent and same-store profit rose 10.8 percent.
Rents increased by 5.2 percent, averaging $14.05 per square foot. Occupancy grew to 92.3 percent during the quarter, up from 90.5 percent during the same period last year.
“We are primarily focused on holding on to as much of our occupancy gains as possible,” Marr said. “As we go into November, December, January and February, our expectation is we’ll need to get a bit more aggressive in terms of opening up the discount funnel.”